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Chapter 9: Child Care

Issues: Child Care

Overview

Child care has been an ongoing issue of public policy concern primarily because, in most American families with children, parents are working outside the home and must arrange for care for their children. This is true regardless of whether parents are married or unmarried and regardless of the age of their children, although mothers of school-age children have a higher rate of employment than mothers of preschoolers. Thus, some form of child care is a fact of life for the majority of families with children, and federal grants and tax credits exist to help offset the expense for those who purchase child care.

Over time, policymakers have debated the appropriate federal role in addressing questions of availability, affordability, and quality of child care. The role of child care as a work support for low-income and welfare-recipient families has been a particular focus of debate. In recent years, child care as a policy issue has broadened into the related areas of early childhood development and education, as research has focused on the connection between children’s early experiences and their successful long-term development. Child care discussions increasingly include a focus on content and quality, while discussions of early childhood development and education increasingly address the need for coordination with child care services to fit the schedules of working families.

The federal government has used a number of different strategies to invest in child care, including broad-based social programs as well as targeted child care programs and tax provisions. This section of the Green Book focuses primarily on the Child Care and Development Fund (CCDF), a term used to refer to the combination of mandatory and discretionary child care funding streams administered jointly by the U.S. Department of Health and Human Services (HHS). The CCDF is the primary source of federal funding dedicated solely to child care subsidies for low-income working and welfare families.

The FY2016 funding level for the CCDF was roughly $5.7 billion, which included $2.8 billion in discretionary funds and $2.9 billion in mandatory funds. Discretionary CCDF funding is authorized by the Child Care and Development Block Grant Act of 1990, which was reauthorized through FY2020 by the Child Care and Development Block Grant Act of 2014 (P.L. 113-186). Mandatory CCDF funding is authorized in Section 418 of the Social Security Act (sometimes referred to as the "Child Care Entitlement to States"). These mandatory funds have generally been operating under temporary extensions of the Temporary Assistance for Needy Families (TANF) program since FY2011.

The CCDF provides block grants to states, according to a formula, which are used to subsidize the child care expenses of working families with children under age 13. In addition to providing funding for child care services, funds are also used for activities intended to improve the overall quality and supply of child care for families in general.

Congressional Research Service (CRS) Reports

The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2016 Green Book website. CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation. For prior reports, please see the 2012 Green Book and 2014 Green Book.

Legislative History

The following provides a legislative history for child care for the second session of the 113th Congress and for the 114th Congress. For prior legislative history, please see prior editions of the Green Book.

Child Care and Development Block Grant

The Child Care and Development Block Grant Act of 2014 (P.L. 113-186) was signed into law on November 19, 2014. This law reauthorized and amended the CCDBG Act for the first time since the welfare reform law of 1996 (P.L. 104-193). The law included a number of provisions focused on health and safety, the needs of working families, consumer education for parents, and the overall quality of child care. In September 2016, the U.S. Department of Health and Human Services (HHS) issued implementing regulations on this law.

To better protect the health and safety of children in child care, the 2014 law and accompanying regulations require states to conduct comprehensive criminal background checks for providers receiving CCDBG funds, as well as providers who are licensed, regulated, or registered in the state (with the exception of individuals exclusively caring for relatives). The law also expands the required content for state health and safety standards to include topics such as first aid, cardiopulmonary resuscitation (CPR), and emergency preparedness, among others. The law requires all CCDBG providers to receive pre-service and ongoing training on all health and safety topics. Further, the law requires states to conduct regular inspections for compliance with health, safety, and fire standards. This includes pre-licensure and annual unannounced inspections for all licensed child care providers receiving CCDBG funds, as well as annual inspections of license-exempt providers receiving CCDBG funds. The law also requires licensing inspectors to be trained in the state’s health and safety standards and licensing rules.

To better support working families, the 2014 law established a 12-month eligibility period for children. This means that once a child is deemed eligible, the child should generally continue to receive CCDBG support for a full year, regardless of temporary changes in parental work status or family income, as long as family income does not increase above the federal threshold of 85% of state median income. In addition, the law requires “graduated phaseout” of CCDBG assistance when incomes rise. This means that states must establish a two-tier eligibility system that allows for continued assistance to children whose family income at the time of their eligibility redetermination has increased above the state’s initial income threshold, but remains below the federal income threshold of 85% SMI.

To help parents learn about the availability and quality of child care in local communities, the 2014 law requires states to have a website describing licensing, monitoring, and background check processes. States must make the results of monitoring and inspection reports available electronically, along with information on deaths, serious injuries, and substantiated child abuse in child care facilities. In addition, state websites must have a searchable list of licensed and license-exempt child care providers, along with information about the provider’s quality rating (if available).

To support states in improving the quality of child care, the 2014 law increased the share of funds states must reserve for quality improvement activities. Specifically, the law incrementally increases the quality spending requirement from 4% of all child care funds (under prior law) up to 9% by FY2020. Beginning in FY2017 (and in every year thereafter), states must also spend an additional 3% on quality activities targeted to infants and toddlers. This means that by FY2020, states will be required to spend a minimum of 12% on combined quality activities. The new law outlines a number of activities states may support with quality spending. For instance, states may offer professional development or other workforce supports, develop or implement tiered quality rating and improvement systems, or cultivate statewide systems of child care resource and referral services. In addition, states must develop or implement early learning and developmental guidelines covering essential domains of development from birth to kindergarten entry. The law requires states to establish qualification requirements for child care providers and to require CCDBG providers to participate in ongoing training and professional development.

The 2014 law also includes a number of more technical changes. For instance, the law amended the state plan process to be triennial, rather than biennial. The FY2016-FY2018 state plans are the first to reflect the requirements of the 2014 law. In addition, the 2014 law included several changes to the program’s allocation formula. Specifically, the 2014 law adds new reservations for a national toll-free hotline and website (up to $1.5 million annually), technical assistance (up to 0.5% annually), and research, demonstration, and evaluation (0.5% annually). The 2014 law also revised the statutory reservation for tribes and tribal organizations, requiring HHS to reserve at least 2% for tribes and tribal organizations (with flexibility to reserve more if certain conditions are met). The 2014 law also gave HHS the authority to waive provisions of the law for up to three years (with an optional one-year extension) at a state’s request.

The CCDBG Act of 2014 authorized discretionary appropriations for each of FY2015-FY2020. The FY2015 and FY2016 appropriations laws each appropriated discretionary CCDBG funding in excess of the authorized levels: $2.435 billion in FY2015 and $2.761 billion in FY2016.

This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.